Money Laundering Control in the Financial Regulation Context
| Pages | 102-103 |
| Date | 01 April 1999 |
| DOI | https://doi.org/10.1108/eb027217 |
| Published date | 01 April 1999 |
| Author | Michael Blair |
| Subject Matter | Accounting & finance |
Journal of Money Laundering Control — Vol. 3 No. 2
KEY COMMENT
Money Laundering Control in the Financial
Regulation Context
Michael Blair
Readers of this journal may find it useful to have a
short note about the implications for control over
money laundering of the government's proposals in
the Financial Services and Markets Bill. This Bill
was introduced into the House of Commons in
June 1999, and is presently going through the Stand-
ing Committee stage in that House. At the time of
writing this note, the only provisions relevant to
money laundering that have been considered and
approved by the Standing Committee are those relat-
ing to the so-called financial crime objective.
THE FINANCIAL CRIME OBJECTIVE
Perhaps the most significant proposal in this context
is
theso-called 'fourth objective' of the FSA as proposed
in clause 2(2)(d) and, in more detail, in clause 6(1).
The Financial Services and Markets Bill is unusual
in providing an objectives framework for the regula-
tor: in a sense, this is the high-level job description
drafted by Parliament against which the FSA's pro-
gress,
challenges and efforts will be measured. This
is not the place for a scholarly analysis of the legal
significance of the objectives: suffice it to say that
Parliament will require the Authority, in discharging
its general functions, to act, as far as reasonably pos-
sible,
in a way which is
compatible
with the objectives,
and in the way which the FSA considers most appro-
priate for the purpose of meeting those objectives.
The financial crime objective itself is stated, at
clause 6(1), as 'reducing the extent to which it is pos-
sible for a business carried on by a regulated person to
be used for a purpose connected with financial crime'.
This clause goes on to make it clear that financial
crime includes any offence involving fraud or dis-
honesty, misconduct in or misuse of information
relating to a financial market, or handling the pro-
ceeds of crime. This provides a broad description of
financial crime, though an important angle to that
is the need to prevent regulated businesses from
being used as a blind or vehicle for, or as an insuffi-
ciently inquisitive carrier of, the proceeds of crime.
So money laundering is very near to the centre of
the objective accordingly.
The nature of the task is further interpreted by
clause 6(2) which requires the Authority to have
regard to a number of factors in dealing with the
financial crime objective. These are to stress the desir-
ability of alertness ('being aware of the risk of their
businesses being used' in this way); self-protection
(taking 'appropriate measures' . . . 'to prevent finan-
cial crime, facilitate its detection' etc); and proper
resourcing ('devoting adequate resources . . .').
These requirements to have regard to the contribu-
tion that can or should be made by authorised firms
can thus be seen to be pointing the FSA in the direc-
tion of particular initiatives, and, at the same time,
indicating that, if firms can look after the challenges
properly, the FSA itself can be less intrusive or inten-
sive in terms of direct effort.
The scope of this objective relates specifically to
regulated persons, which includes firms with FSA
authorisation and also the recognised investment
exchanges and clearing houses. So the focus is not
simply on banks, insurance companies and invest-
ment houses but also on organised financial markets.
RULE-MAKING POWERS
The next provision to note is clause 117. It would
empower the Authority to make rules in relation to
the prevention and detection of money laundering
in connection with the carrying on of regulatory
activities by authorised persons.
In due course, the FSA will expect to issue for
consultation some proposals relating to the use of
this new rule-making power. Plainly, the existing
money-laundering regulations of 1993 (imposing
procedural requirements about record keeping,
reporting suspicions etc) will be a starting point.
Journal of Money Laundering Control
Vol 3. No 2,1999, pp. 102-103
© Henry Stewart Publications
ISSN 1368-5201
Page 102
To continue reading
Request your trial